Tron and Tron-based tokens have surged between 500% and 4000% on the FTX exchange as the exchange pursues alternative options to get out of its liquidity crunch.
The surge started after FTX announced it reached a $13 million agreement with Tron to allow holders of TRX, BitTorrent (BTT), JUST (JST), Sun Token (SUN) and Huobi Token (HT) to swap assets directly from FTX to external wallets. Despite disabling new deposits of Tron-based tokens on FTX, many traders on FTX began to up their bids for the TRX and other Tron-based tokens.
Recall that FTX previously halted withdrawals on November 8 after the FTX token lost $8 billion of its value. The downtrend caused a liquidity crunch, causing the exchange to pause withdrawals. Afterward, a potential Binance-FTX deal to provide liquidity fell through even as users ramped up withdrawal requests as fears that FTX was going down multiplied.
Implications of the Tron-based Tokens Surge
TRX temporarily surged by as much as 4000% on FTX to trade at $2.50. Contrarily, it continued to trade at about $0.05 on other exchanges. BTT, JST, SUN, and HT also surged. Unfortunately, users who recoup their locked liquidity by buying assets at inflated prices will lose value when selling them on other exchanges.
While the deal with Tron will not solve FTX’s liquidity crunch, it will nevertheless take care of some of the $6 billion withdrawal requests received as of November 6. Also, FTX CEO Sam Bankman-Fried has maintained that FTX has about $16 billion in total assets while its liabilities are $10 billion.
The Bahamas Alternative
Meanwhile, FTX is allowing Bahamas-based customers to withdraw from the exchange since the exchange is based in the Bahamas. Consequently, some users have suggested those with locked liquidity use Bahamas residents to recoup their funds. However, this is unlikely to work given that the Securities Commission of The Bahamas (SCB) has reportedly frozen the assets of FTX Digital Markets and its related parties. The SCB also suspended the firm’s registration in the country.
In all of this, the United States subsidiary of FTX, FTX.US, has maintained its operation as always. However, emerging reports suggest that FTX.US may also follow suit and halt withdrawals.
An experienced writer with practical experience in the fintech industry. When not writing, he spends his time reading, researching or teaching.
Binancechain News
Ecosystem
News Network
About CcS News
Swap & Stake